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Last updated at: (Beijing Time) Friday, February 20, 2004

Over half of Chinese rural households need financing

Over half of Chinese rural households want to have financing services but no more than 20 percent of the funds they��ve got is provided through regular channels such as loans from rural cooperatives, pointed out Prof. Kong Xiangzhi from the department of agricultural economy, People��s University of China.


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Over half of Chinese rural households want to have financing services but no more than 20 percent of the funds they��ve got is provided through regular channels such as loans from rural cooperatives, pointed out Prof. Kong Xiangzhi from the department of agricultural economy, People��s University of China.

A survey on rural households in five counties in Shannxi, Ningxia and Sichuan was conducted by the end of 2003 by Professor Kong��s research team of ��Evidence-based Studies on Farmer��s Behaviors for Selecting Green Agro-technique�� as a project under the National Natural Sciences Foundation of China. These households as subject survey are mostly specialized in farming. Part of the results of the survey indicates that about 70 percent of the 420 households interviewed ever borrowed money from their relatives, friends or credit institutions in the past five years and among them only 30 percent sought for loans from rural credit cooperatives.

The survey found out that financing among relatives and friends was the main alternative to loans from rural credit cooperatives. The reasons for their preference of borrowing from relatives and friends are more easily accessible and informed, of simpler procedure, no interest, and more customary in rural areas as compared to seeking for loans from rural credit cooperatives. Farmers�� inadequate understanding about the credit was also the cause that they felt less interested in rural credit cooperatives, according to the survey.

The survey indicated that further understanding of the small amount credit by rural households has made more rural households interested in and successful in extending small amount credit to them. The amount they asked for also increased. Small amount credit was granted to 20 percent rural households in 2002 and to 15 percent in the previous ten months of last year.

The survey concluded that rural households heavily invested their loans in agriculture, forestation and fishery, including adopting agro-technique. 60 percent of the small amount loans, totaling 4.8m yuan, to rural households in 2003 was channeled to these sectors. Agriculture, forestation and fishery also absorbed more than half of other kinds of credit.

(By People��s Daily Online from Ta Kung Pao, Hong Kong)




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